Edison Pharmacy Operators, Pharmacist Charged In $33M Prescription Scam: Feds

EDISON, NJ – Two pharmacy executives and a pharmacist from an Edison company were arraigned Monday on charges of defrauding Medicare and TRICARE for $33 million, Attorney for the United States Vikas Khanna announced.

The pharmacy executives are also charged with paying and conspiring to pay illegal kickbacks.

William B. Welwart 69, of Staten Island, New York; Ethan B. Welwart, 35, of Bolivar, New York; and Gary Kaczka, 62, of Saddle Brook, New Jersey, are each charged in a 22-count indictment with conspiracy to commit health care fraud and wire fraud, and health care fraud.

William and Ethan Welwart are additionally charged with wire fraud, conspiracy to violate the federal anti-kickback statute and payment of illegal kickbacks.

The men operated pharmacies, including Apogee Bio-Pharm LLC in Edison.

According to authorities, from January 2017 to December 2020, William was the CEO and owner of Apogee and Ethan was the director of operations and the purported owner of additional pharmacies used to perpetuate the scheme. Kaczka was a pharmacist-in-charge at Apogee.

The three men worked with marketing companies to generate medically unnecessary prescriptions, according to authorities. The Welwarts and others also agreed to pay kickbacks to marketing companies in return for referring prescriptions for expensive medications to the pharmacies, according to the indictment.

The marketing companies identified Medicare and TRICARE beneficiaries to target for expensive drugs and contacted them by telephone to pressure them to agree to try expensive medications, such as pain creams, scar creams, eczema creams, and migraine medication, authorities said.

The marketing companies then transmitted recordings of telephone calls with the beneficiaries, together with pre-marked prescription pads for particular drugs that would yield huge reimbursements, to telemedicine companies. The marketers paid the telemedicine companies kickbacks for every beneficiary referred for a prescription, and the telemedicine companies paid doctors to approve the prescriptions, Khanna said.

The marketing companies then directed the prescriptions to pharmacies, including Apogee, with which they had kickback arrangements. The pharmacies filled the prescriptions and sought reimbursement from federal health care benefit programs, Khanna said.

The pharmacies, including Apogee, then paid a portion of each reimbursement to the marketing companies as a kickback, according to authorities.

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